Protesters in Madrid demand the resignation of prime minister Mariano Rajoy on Thursday night over a slush fund scandal, which has deepened anger over austerity. Rodrigo Garcia/Rex Features

3.09pm BST

G20 summit text - first look

Back in Moscow, the first day of the G20 finance ministers' meeting is winding up and we have had a glimpse of the summit communique, courtesy of Reuters.

The word of the day is rebalancing, with predictably warm words about boosting “jobs and growth”

Here are the top lines from the draft that Reuters has seen.

“We are determined to continue progress with rebalancing of global demand, which requires internal rebalancing through structural reforms and exchange rate flexibility.”

“We reiterate our commitments to move from more rapidly toward more market-orientated exchange rate systems and to refrain from competitive devaluation.”

The text did not specify debt targets, but said fiscal strategies should be "credible, country-specific and ambitious".

So does this mean Germany will do more to encourage consumer spending? And where will all those jobs come from in austerity-battered southern Europe?

The G20 finance ministers' meeting in Moscow. Yuri Kochetkov/EPA

We will have more on the site later on the G20 summit, especially that major tax deal.

And on that note, I am wrapping up the blog for the day. Thank you all for following and have a good weekend. JR

Updated at 3.36pm BST

2.33pm BST

China hits its Great Wall - Krugman

Talking of China...

Economist Paul Krugman has written a gloomy, but fascinating blog on China's economic problems.

China is in big trouble. We’re not talking about some minor setback along the way, but something more fundamental. The country’s whole way of doing business, the economic system that has driven three decades of incredible growth, has reached its limits. You could say that the Chinese model is about to hit its Great Wall, and the only question now is just how bad the crash will be.

The big problem is that China is running out of surplus peasants, he writes, the workers who have flooded into urban factories to man production lines. That surplus labour, which kept wages pinned to the floor, is now running out.

That should be a good thing. Wages are rising; finally, ordinary Chinese are starting to share in the fruits of growth. But it also means that the Chinese economy is suddenly faced with the need for drastic “rebalancing” — the jargon phrase of the moment. Investment is now running into sharply diminishing returns and is going to drop drastically no matter what the government does; consumer spending must rise dramatically to take its place. The question is whether this can happen fast enough to avoid a nasty slump.

And the answer, increasingly, seems to be no.

Not everyone agrees; this debate looks set to run.

Updated at 2.34pm BST

2.20pm BST

China liberalises interest rates regime

China has announced a eye-catching banking reform - the People's Bank of China will end controls over the interest rates that smaller banks are allowed to charge their customers. The World Bank and the United States have been pushing China to make a move to market-driven pricing of credit.

But, the significance may lie more in the symbolism than the substance, according to some experts.

It's a very big deal, probably more in terms of what it symbolises than the effect on the economy. China has been talking about interest rate liberalisation for a long time, this is one of the biggest steps they could have taken. It does not necessarily change very much today, but it tells you something about the trajectory. Only a very small proportion of loans will be affected by this decision.

Flemming Nielsen, senior analyst, Danske Bank:

This underlines that China is moving to a fully convertible currency and floating exchange rates. Liberalisation of interest rates is a necessary condition for convertible currency and floating rates and their next step will be to widen the daily trading band for renminbi. They should do that within the next three months.

Ken Peng, senior economist at BNP Paribas SA:

Most observers would be disappointed to find out that it was only the removal of the lending rate floor...This decision shows that some reform is being done, but may actually reduce the chances for deposit-rate liberalization in the near term.

Debt is not just a European story today. Detroit, once known as motor city, has filed for bankruptcy, with debts of at least $18bn (£12bn).

The Wall Street Journal writes on the long painful decline of the town that was the equivalent to California's Silicon Valley in the early twentieth century.

Michigan's Republican governor Rick Snyder said:

This was a difficult and painful decision, but I believe there are no other viable options... This is a situation that's been 60 years in the making in terms of the decline of Detroit. From a financial point of view, let me be blunt: Detroit is broke."

In Greece Schäuble is a hated man; loathed as much for the austerity he has personally prescribed as the manner with which it has been handed out. No one is more identified with the twin ills – runaway unemployment and rising poverty – now bedevilling the county than he. To pretend otherwise is to play a fool's game.

But on Thursday Schäuble pulled off a stellar performance doing just that as he made his first visit to the country since the eruption of Europe's debt crisis in Greece in late 2009.

The political opposition may have declared him persona non grata. And riot police may have turned Athens into a garrison town, its roads sealed off in one of the biggest security cordons thrown around the capital in living memory.

But responding with a charm attack few would have thought possible for a politician more usually associated with irascibility, in meeting after meeting Schäuble pressed home the message that he was "happy" to be in Greece – and even better, delighted with the progress its debt-stricken economy had made.

"This visit is an expression of our confidence in, and support for Greece," he enthused. "I have not come as a teacher to give lessons."

.....

"This is nothing but a PR campaign, an attempt to say Greece is a success story and the eurozone crisis is over," a senior prime ministerial aide confided.

"And we all know that is not the case because it's only now, in the coming months, that we will even begin to see the results of the measures."

12.27pm BST

It is the season for no-confidence votes - yesterday, Portugal; today Italy. Minister Angelino Alfanois is being called on to resign over the deportation of the family of a Kazakh dissident.

Updated at 12.28pm BST

12.02pm BST

Investors are turning their gaze to Portugal once again, as the country's political parties scramble to agree a "salvation" deal that will keep its international bailout on track.

Last night the centre-right coalition government survived a no-confidence vote, but political consensus is fragile. President Anibal Cavaco Silva has called for a "national salvation pact" between the parties.

At stake are plans to cut spending by €4.7 billion next year to keep the country on track to meet EU-IMF bailout.

Analysts at Citi are not too hopeful.

The political situation remains unstable, with early elections in the autumn still a clear possibility if parties do not reach common ground to form a grand coalition.

According to Reuters, the yield gap on Portugal's ten-year bonds is close to its lowest point this year, suggesting investors are still worried about the country's credit.

11.15am BST

Madrid protesters clash with police

Police charge against demonstrators in Madrid as a wounded man lays unconscious on the pavement. Czuko Williams/Demotix/Corbis

Thousands of protesters called for the resignation of prime minister Mariano Rajoy over slush-fund allegations. Photograph: Rodrigo Garcia/NurPhoto/Corbis

A demonstration outside the ruling Popular party headquarters. Rodrigo Garcia/Rex Features

The extraordinary scenes on the streets of Madrid last night when thousands of protesters calling for the resignation of Mariano Rajoy clashed with police.

As AP reported, the peaceful event turned violent and ended in arrests. Rajoy is denying allegations that he took illegal payments and so far refusing to resign.

Austerity bites Vodafone

Another sign of the pain in southern Europe can be read in Vodafone's latest quarterly results, out this morning. The world's second largest phone company reported steep falls in revenues in Spain and Italy, as consumers cut back on mobile calls and hang onto their old handsets.

Revenues for the three months to 30 June were down 10.6% in Spain and 17.6% in Italy. Even in Germany, Vodafone's biggest European market, revenues fell 5.1%, while they dropped 4.5% in the UK.

I've taken the numbers from Reuters.

10.14am BST

UK on track on borrowing targets

Here in the UK, data showed that the government is on course to meet its borrowing targets, even though the deficit for June was slightly worse than expected.

This leaves the public sector net debt standing at £1,202.8 billion, 75% of gross domestic product. And that is not counting the cost of bank bailouts...

Here is some analysis from ING

The public finance numbers for June aren’t quite as good as hoped for with the deficit (public sector net borrowing excluding financial interventions) coming in at £8.0bn versus consensus forecasts of £8.5bn....

The government’s full year (underlying) borrowing forecast of £120.9bn also looks on track. With economic activity starting to show some positive signs and with employment continuing to grow we would not be surprised to see the full year borrowing figure creeping below this forecast though.

9.27am BST

G20 backs tax avoidance plan

More on the G20 crackdown on tax avoidance. Finance ministers in Moscow have endorsed the first ever international approved plan to rein in tax avoidance by big multinational companies.

George Osborne and his finance minister counterpart Wolfgang Schäuble have issued a joint statement.

It is the most ambitious programme of reform since the principles for bilateral tax treaties were first laid down by the League of Nations in the 1920s, laying the ground for the modern era of globalised trade.

The action plan sets out 15 initiatives for arming tax authorities around the world with the tools to crack down on some of areas international leaders agree are among the most widely exploited by multinational tax avoiders.

But tax-campaigners see little to cheer. This is what the Financial Transparency Coalition (FTC), an umbrella group of charities, had to say:

The OECD has done little to dispel its reputation as the “rich men’s club” by effectively ruling out the active participation of developing countries in shaping the tax reform agenda.

Updated at 10.22am BST

8.48am BST

European and Japanese stocks down

As widely expected, European stocks fell on market opening:

FTSE 100 -0.40% 6,607.14

DAX 30 -0.50% 8,295.49

CAC 40 -0.55%, 3,906.00

Over in Japan, the Nikkei ended 1.5% lower, ahead of a weekend election, where prime minister Shinzo Abe is expected to take control of the upper house.

Reuters reports that Abe is heading for a resounding win, although economy-watchers worry that a big victory “could allow him to push nationalist policies at the expense of his “Abenomics” agenda of monetary expansion".

Barclays Capital writes:

“The outcome from this weekend's upper house elections will help determine the ability of the Abe administration to deliver on structural reforms and its long-term growth strategy.”

Via Reuters

8.21am BST

G20 discusses jobs crisis in Moscow

Good morning, and welcome to our rolling coverage of the latest events in the eurozone, the financial markets and the global economy.

The global caravan of international summitry is in Moscow today, where G20 finance ministers and central bankers will discuss the jobs crisis, against a backdrop of 60% unemployment in Greece and Spain.

US treasury secretary Jack Lew has issued a brisk message to the Europeans to pull their socks up and get the economy moving again.

When the finance and labour ministers of the Group of 20 leading nations gather today in Moscow, getting people back to work must be top of the agenda. In many parts of the world, such as Europe, growth is too weak to drive job creation, and it is critical to take steps to bolster private hiring.

We have an enormous stake in Europe's success. Recalibrating the pace of fiscal consolidation, so that a fall in activity does not require more cuts, is a step in the right direction.

Now that sounds like a warning against further austerity...

Also on the G20 agenda is a plan to close down tax loopholes used by corporations such as Apple and Amazon (more later).

Here in the UK, we are expecting an update on the public finances at 9.30